Friday, November 18, 2022

Short Takes: FTX Debacle and Foreign Withholding Taxes

It’s amazing how trivial it is to invest well, and yet we need to know a lot to be able to avoid changing course to some inferior strategy that sounds good but isn’t.  I did poorly with my own portfolio for about a decade before smartening up, and I’ve done well for my mother, sister, and mother-in-law, but I haven’t been able to help most others who ask for advice.  In most cases, I end up watching helplessly as they make choices with poor odds.  It would be easier if saying “just buy VBAL” were persuasive.

Here is my review of a book on homeownership:

House Poor No More

Here are some short takes and some weekend reading:

Marc Cohodes
holds nothing back in his analysis of Sam Bankman-Fried and FTX.  I doubted that I’d end up listening to the entire podcast, but I couldn’t stop once I started.

Justin Bender explains U.S. foreign withholding taxes (FWT) on various types of ETFs that hold U.S. stocks.  This is an important topic, because FWT on dividends can be much greater than ETF MERs.


  1. I had never heard of Marc Cohodes before and know nothing about his track record before FTX. Maybe he got it right with FTX. But he really comes across like a conspiracy theorist. Nobody knows anything about this Gary Wang guy, but there are only three photos of the guy, so he must be a member of the CCP, right? Nothing to substantiate the claims, but let's just throw that out there.

    Constance Wang, the COO is referred to as "this guy" and "he", when five seconds on Google shows they're a woman. Somehow it's suspicious that Bankman-Fried and Wang went to some math camp together, university together and ended up working on a company together? Well, no, people who know each other start companies together all the time. Much more often than strangers do.

    I don't know, we'll have to see if he continues to get things right, or if he turns out to be another My Pillow guy. That interview sounded very crackpot-ish to me, though.

    1. Marc Cohodes has a decent track record of getting these things right. His style is unorthodox at best. His explanations of why he became suspicious enough to investigate made sense. I took his wilder claims about Gary Wang (who is in a position that would normally have some public presence) in the sense of "for all we know ...", but it's true that those CCP claims are completely unsubstantiated. If I limit my evaluation of his remarks to whether there is something seriously wrong with FTX, I'd say he got it right.

      One thing I'll give Cohodes is that he's a lot more entertaining than the My Pillow guy.

    2. No question, something is fishy at FTX (and maybe most crypto exchanges, given the rate at which they get hacked and/or implode, taking people's money with them).

      The reclusive co-founder, no experience in the business, no mentor, living with ten roommates and sleeping on a futon, yeah, that can make you question whether that's a company you want to deal with. Totally fair. But we don't have to start making stuff up about the CCP or innuendo about shady Canadian math camps... just stick to the facts.

      One last thing, he presents himself as not benefiting from the collapse of FTX ("this one's free because I can't short the company") and having only altruistic motives (he spoke of hating seeing Bankman-Fried and his pals take people's money, etc). But after reading about him, though (I mean it's on his own Twitter feed), it turns out he is involved in tZERO (oh... a competing crypto brokerage?) and was involved a deal between that company and the owner of the NYSE earlier this year and is now hawking tZERO pretty hard on Twitter. So it seems like he does actually have an undisclosed horse in this race. So did he really want to take down FTX for the good of humanity, or did he just want to take down a competitor to his own investment? ...Which is actually a Russian front??? (Ok, I made that last part up, but apparently we can do that now.)

  2. I would like to be sympathetic to most everyone that has lost money, however in the "crypto" world I can't be. Wasn't the "Mount Gox" collapse already enough to teach people a lesson years ago about these "exchanges"?
    Crypto is entirely speculative, it's the modern version of the boiler room penny stock era with a new twist. The predators that push and defend it come out in droves whenever someone is negative about crypto. The sheep take the bait and unfortunately the most vulnerable are always the ones to lose the most from these versions of get rich quick schemes. Even "safer" ways to invest in Crypto have collapsed : Purpose Ether Yield ETF (ETHY.TO) for example.

    1. I agree that cryptocurrencies are entirely speculative, and I have no interest in risking my money on them. It's also true that I don't have sympathy for some of the people who have lost money. But, there are some I do have sympathy for.